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Eno Transportation Weekly

This month, the New York City Council voted on a number of amendments pertaining to for-hire vehicles (FHVs) and taxis, and on August 14, Mayor DeBlasio signed the bills into law. The new legislation applies in part to FHVs including Uber, Lyft, Juno, and Via, and in part to taxis including Yellow Taxis and Green Taxis. The law includes several new provisions that directly affect drivers, dispatch companies, and riders. The most notable changes to the law are:

Permission to enforce a minimum payment for FHV drivers

The Taxi and Limousine Commission (TLC) can set a minimum pay rate for drivers, adding financial security for FHV drivers who are not guaranteed minimum hourly earnings and have fluctuating fares (and thus earnings) due to the transportation network companies’ (TNCs) power to control fares. A 2018 study commissioned by the TLC recommended an hourly minimum wage of $17.22 to cover the $15/hr minimum wage in New York City plus $2.22 to cover energy and wear and tear on the vehicle, plus additional income to cover paid time off. The study also shows that merely increasing the number of trips operated by each driver would cover most of the increased revenue necessary to cover the increased compensation.

In New York City, Uber, Lyft, Juno, and Via drivers are organized through the Machinists Union with the Independent Drivers Guild (IDG). The IDG strongly backed setting a minimum payment for drivers.

Cap on the number of permits to operate a FHV for one year

From a societal perspective, limiting the number of permits can help curb additional VMT and congestion while still providing on-demand transportation options. More rides per vehicle would lead to less deadheading and idling by both FHV and taxi drivers. The moratorium on allowing new permits for FHVs will also help the TNCs deal with the minimum driver wage by facilitating higher demand for the drivers on the road. Since the companies will have to supplement driver earnings to reach the minimum payment, the closer the drivers are to meeting that minimum through providing a service, the less has to come from the TNCs’ pockets. Wages, reckless driving, and congestion were all part of the reasoning for the initial institution of New York City yellow taxi medallions in 1937, a limit on the number of ride hailing vehicles still in place today. Restricting the number of FHVs will benefit the taxi drivers as well by reducing supply thus helping both taxis and FHVs find fares.

The IDG supported the permit cap as well as the minimum fare amendment. Drivers’ concerns that an oversaturated market leads to fewer rides and lower prices provided a basis to unite the members to support this law. The IDG is now lobbying to set a limit on the leasing price for vehicles, worrying that a permit cap will drive up prices. Maintaining an accessible price to lease vehicles can give more people the opportunity to drive for FHVs. The IDG does not appear to be focusing on accessibility of vehicles, but as long as the City passes regulations on leasing prices, they might as well take the opportunity to further incentivize driving a wheelchair accessible (WAV) vehicle through lower leasing costs.

Special dispensation for wheelchair accessible vehicles (WAVs)

The vehicle permit restriction does not include WAVs, opening up the opportunity to increase the percent of FHVs that are wheelchair accessible. By allowing WAV vehicles to continue to apply for and receive permits, the percent of WAV vehicles in the fleet should increase, in theory increasing equality in service availability and decreasing wait times for people with varied mobility needs. The TLC wage study accounts for the higher expense of owning and operating a WAV vehicle and recommends that the minimum hourly wage for drivers of those vehicles be higher to account for the extra costs.

Increasing the number of on-demand WAVs on the street will help ensure that new mobility options are more equitable than previous systems. By allowing only WAV vehicles to obtain new permits, the City is encouraging drivers to prioritize the provision of on-demand transportation to serve all New Yorkers, not just those who don’t use mobility aids.

Establishment of more driver assistance programming

The August 8 City Council meeting began with the removal of members of the public due to rowdiness related to an unrelated topic. Speaker Corey Johnson stated that among those removed included family members of taxi drivers who had taken their lives in recent months due to financial stress. This part of the law would hopefully help drivers in need find assistance, and also help them address issues including financial ones early on before situations seem fatally desperate. A separate amendment furthers progress towards achieving better financial stability for drivers by requiring financial agreements in the rental and purchase of vehicles that could include consumer protection clauses and capped costs, thus ensuring a certain amount of driver awareness and education about the financial commitment as well as protections and assistance.

(Ed. Note: However, as this September 2017 New York Times article pointed out, a major reason for the financial stress on NYC taxicab drivers is that artificial 1937 cap on the number of taxi medallions, which caused their price on the resale market to rise as high as $1 million. It is the drivers who leveraged everything to buy a medallion at a high price, only to see competition from Uber and Lyft drive the price down to as low as $200,000, who have seen the most financial stress. See point #5 below for more details. And the Daily News recently pointed out that NYC had assumed $750 million in receipts from future sales of these medallions but the sales have now been canceled, blowing a hole in the city budget.)

The law simply states that new centers will be established to provide services and information for drivers and vehicle owners, such as mental health services and financial counseling, and help point drivers towards additional resources. An important part of this type of programming that is not mentioned in the New York legislation would also be to make sure that drivers and vehicle owners are aware of the resources and are not deterred from utilizing them due to social or cultural stigma and norms. Highest impact for assistance can be achieved when the population is aware of the existence of services and takes advantage of them when needed.

Studies on financial debt of individual medallion owners and on equity in accessibility and mobility

Studies will be conducted over the next year in order to assess theimpacts of the above changes in the law. The timelines are aligned such that research results should be able to inform decision-making when the temporary one-year permit moratorium expires. The most rigorous studies require quarterly reports and appear to be structured towards a performance-based assessment of driver earnings, availability, and well being; congestion, including impacts from specific vehicle classifications; geographic distribution of rides; and any other relevant topic of interest.

Additionally, by June 2019, the TLC must finish a study on the excessive debt facing taxi medallion owners due to the extreme drop in value with the addition of FHVs cutting into the taxi customer base. The studies must provide recommendations for future action and will inform policy set by the TLC and the City Council. The experimental design, methods, and evaluation techniques for the studies are not specified. Previous regulations on FHVs in New York take a performance-based approach, providing a starting point to guide the goals and evaluation of the new studies.

With this new law, New York City now has the most stringent regulations on TNCs of any city in the country. These laws are meant to protect New York City residents including riders, drivers, and the rest of the community. City politics may be one reason behind the extensive laws, but the lobbying behind the recently passed amendments suggest that that the existence of the TLC and the IDG in New York City have had a major impact on the policies set for taxis and FHVs.

On August 8, many of the council members spoke to their dissatisfaction with the state of transportation in the City, highlighting problems of taxi driver desperation, vehicle congestion, inequitable access to transportation services, and low wages. They placed blame across all modes including single occupancy vehicles, FHVs, taxis, and the New York Metropolitan Transit Authority (MTA). The legislation passed on August 14 is a step towards many of the TLC’s goals. In order to reach the New York City transportation network goals that many council members seem to have set their sights on, transportation reform needs to come in the from of a multi-modal approach.

The views expressed above are those of the author and do not necessarily reflect the views of the Eno Center for Transportation.

This is a letter marked "CONFIDENTIAL" from Treasury Secretary Ogden L. Mills to Acting House Ways and Means chairman Charles L. Crisp dated February 16, 1932 recommending that Congress enact a new excise tax on gasoline to help eliminate the projected federal deficit.

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